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EU plans to regulate 'shadow banking' sector
March 19, 2012--EU markets commissioner Michel Barnier launched on Monday proposals to "shed light" on new risks to financial services with plans to regulate Europe's so-called shadow banking market.
"What we do not want is for financial activities and entities to circumvent existing and foreseen rules, allowing new sources of risk to accumulate in the financial sector," Barnier said of plans drawn up to meet European Union commitments to the G20.
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Source: EUbusiness
Eu Commission-Green Paper on Shadow Banking
March 19, 2012--1. INTRODUCTION
The 2008 crisis was global and financial services were at its heart, revealing inadequacies
including regulatory gaps, ineffective supervision, opaque markets and overly-complex products.
The response has been international and coordinated through the G20 and the
Financial Stability Board (FSB).
The European Union has shown global leadership in implementing its G20 commitments. In line with EU's Roadmap for Financial Reform, the Union is very advanced in implementing
the reforms linked to the G20 commitments. Most of the reforms are now going through the
legislative process. In particular, a major achievement has been the recent adoption by the Council and the Parliament of landmark legislation on over-the-counter derivatives.
Negotiations are also well developed on measures to revamp capital requirements for the banking sector. Overall, the reforms will equip the EU with the tools designed to ensure that
the financial system, its institutions and markets are properly supervised. More stable and responsible financial markets are a pre-condition for growth and for the creation of a business
environment that allows companies to thrive, innovate and expand their activities. This in turn
enhances the confidence and trust of citizens.
However, there is an increasing area of non-bank credit activity, or shadow banking, which has not been the prime focus of prudential regulation and supervision. Shadow banking performs important functions in the financial system. For example, it creates additional sources of funding and offers investors alternatives to bank deposits. But it can also pose potential threats to long-term financial stability.
view paper-European Commission-Green Paper Shadow Banking
Source: European Commission
Deutsche Boerse challenges EU on merger veto
March 19, 2012--German stock market operator Deutsche Boerse said on Monday it would challenge a European Union veto against a merger with NYSE Euronext that would have created the world's largest exchange operator.
"Deutsche Boerse will file charges at the European Union court in Luxembourg," the company said in a statement, referring to the European Court of Justice, while adding that "several aspects of the decision" by the European Commission were "incorrect".
Last month the companies cancelled their mega-merger after European regulators vetoed their plan to create the world's largest exchange operator over concerns it would potentially dominate the global derivatives trade.
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Source:EUbusiness
Grappling with systemic concerns
March 19, 2012--In Europe, as well as globally, retail and institutional investors have been steadily embracing the use of exchange-traded funds. Last year, ETFs in Europe saw net inflows of $22bn, according to ETF Global Insight,
while Ucits funds suffered net outflows of $119bn according to the European Fund and Asset Management Association.
Regulators and investors are still discussing how they should treat ETFs in the future. Synthetic and physical ETFs are seen as being significantly different in their structure and potential risks.
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Source: efinancial news
Two new Ossiam equity index ETFs launched on Xetra
March 19, 2012--Two new index funds issued by Ossiam Lux have been tradable on Xetra® since Monday.
The two Ossiam Emerging Markets Minimum Variance Index NR ETFs track the performance of the most liquid companies in the S&P/IFCI Index, which comprises the leading companies from emerging market countries.
One is denominated in the trading and fund currency euro, the other in US dollar.
ETF name: Ossiam ETF Emerging Markets Minimum Variance NR (EUR share class)
Asset class: equity index ETF
ISIN: LU0705291903
Total expense ratio: 0.75 percent
Distribution policy: non-distributing
Benchmark: Ossiam Emerging Markets Minimum Variance Index Net Return USD
Trading currency: euro
ETF name: Ossiam ETF Emerging Markets Minimum Variance NR (USD share class)
Asset class: equity index ETF
ISIN: LU0705291812
Total expense ratio: 0.75 percent
Distribution policy: non-distributing
Benchmark: Ossiam Emerging Markets Minimum Variance Index Net Return USD
Trading currency: US dollar
The two ETFs on the indices of the Ossiam Minimum Variance series enable the investor to participate in the performance of strongly diversified portfolios which are composed in a dynamic process. The weighting of the selected shares is set in accordance with an optimisation process, which creates high risk diversification and accordingly low variance.
The product offering in Deutsche Börse’s XTF segment currently comprises a total of 941 exchange-listed index funds, making it the largest offering of all European stock exchanges.
Source: Xetra
New launch: PIMCO Short Term High Yield Source ETF
March 19, 2012--PIMCO, a leading global investment management firm and Source, a
specialist provider of exchange traded products, are pleased to announce the launch of the PIMCO Short‐Term High Yield Corporate Bond Index Source ETF (“STHY“).
The Exchange Traded Fund (ETF) is
listed on the London Stock Exchange and aims to track the BofA Merrill Lynch 0‐5 Year US High Yield Constrained Indexi.
STHY is the first ETF available in Europe to provide investors with physical access to the short maturity sector of the high yield universe. High yield exposure has been used by many as an alternative to equities. Historically, returns of the short‐term segment of the high yield market have been in line with equities, but with approximately half the volatility.
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Source: Source ETF
Exchange-Traded Funds Targeted in EU Shadow-Bank Clampdown
March 19, 2012--Exchange-traded funds may face tougher regulation of derivatives trades as part of a European Union clampdown on so-called shadow banks that could pose a threat to the region’s financial system.
The European Commission said today that it is examining potential “conflicts of interest” affecting ETFs, a type of fund that tracks an index and whose shares are publicly traded. The regulator is also reviewing whether banks and other financial firms are using so-called repurchase agreements, or repos, to build up excessive levels of debt.
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Source: Bloomberg BusinessWeek
FSA seeks total ban on inducements
March 18, 2012--The UK's Financial Services Authority has called on the European Union to follow its lead and adopt a Europe-wide ban on inducements for all advisers.
The FSA is one of several influential parties requesting that the European Parliament impose a blanket ban on inducements.
Current proposals set out by the European Commission as part of its Mifid II consultation exercise recommend that inducements are outlawed only for independent advice.
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Source: FT.com
Euro area investment fund statistics
March 18, 2012--In January 2012, the amount outstanding of shares/units issued by euro area investment funds other than money market funds was €220 billion higher than in December 2011.
This increase was due mainly to increases in share/unit prices and the statistical reclassification of some money market funds as bond funds.
The amount outstanding of shares/units issued by euro area investment funds other than money market funds increased to €5,885 billion in January 2012, from €5,665 billion in December 2011. Over the same period, the amount outstanding of shares/units issued by euro area money market funds decreased to €938 billion, from €992 billion. These developments are partly explained by
statistical reclassifications of a number of money market funds as bond funds in January 2012, with the
amount involved totalling about €57 billion (see notes).
Transactions1 in shares/units issued by euro area investment funds other than money market funds amounted to €17 billion in January 2012, while transactions in shares/units issued by money market funds amounted to €6 billion.
The annual growth rate of shares/units issued by euro area investment funds other than money market funds, calculated on the basis of transactions, was 0.5% in January 2012, while the annual growth rate of shares/units issued by euro area money market funds was -0.1%.
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Source: ECB
CDS has amplified European crisis: it’s official!
March 16, 2012--There is now "scientific proof" that credit derivatives have amplified the European debt crisis, a team of researchers said, and has called for more regulation of the market.
They say that failing to make the market more transparent and standardised could lead to financial speculation ruining the massive efforts that developed countries have made to balance their budgets.
Credit default swaps (CDSs) act as insurance against debt issuers defaulting. It should be that the higher the risk of default, the higher the premium on a CDS.
But researchers said this old wisdom is not always true and data proves that these instruments are used for speculation against the deteriorating conditions of sovereign states.
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Source: Funds Europe
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